Former Twitter Leaders Launch Larger Second Venture Fund

Dick Costolo and Adam Bain, previously the CEO and chief operating officer of Twitter, have finalized a second venture fund. This development occurred just eighteen months after announcing their initial $135 million fund for their firm, 01 Advisors.

Fund Details and Investor Participation

An SEC filing reveals that the second fund was completed last week, securing $325 million in capital commitments. This investment comes from a total of 81 investors.

01 Advisors' Core Mission

Costolo and Bain have articulated the firm’s purpose as supporting companies navigating rapid growth. They aim to assist businesses that have achieved product-market fit but are facing challenges related to scaling operations.

Bain explained that these companies often experience instability as they expand, requiring a shift from product development to comprehensive company building. He emphasized the need for experienced operators who can provide guidance during this critical phase.

Investment Strategy and Focus

The firm’s investment approach centers on concentrated bets within both the consumer and enterprise technology sectors. They provide funding at various stages, including Series A and Series B rounds.

01 Advisors seeks to offer not only capital but also operational expertise and mentorship to founders facing hyper-growth challenges. They prioritize supporting companies that require “been-there-at-scale” advice.

Portfolio Companies and Recent Investments

Several companies have benefited from 01 Advisors’ investment strategy. These include:

• Literati: An Austin, Texas-based book club subscription service that secured $40 million in Series B funding.
• Tipalti: An Israel-based provider of global payment automation software, raising $150 million in Series E funding.
• SpotOn Transact: A payments software startup that received $50 million in Series B funding, followed by a $60 million Series C round.

Growth During the Pandemic

Numerous portfolio companies experienced significant growth during the pandemic. Modern Health, a San Francisco-based mental health platform, recently announced $74 million in Series D funding, building on a previous $51 million Series C round.

Modern Health is currently valued at $1.17 billion and has raised approximately $170 million to date, with 01 Advisors participating in the latest funding rounds.

Firm Structure and Team

01 Advisors has maintained a relatively stable team size since its public launch in August 2019. The firm’s founding partners include Costolo, Bain, and Dave Rivinus.

Kelly Kovacs, a partner at the firm, previously served as Costolo’s chief of staff at Twitter. Lacey Behrens has been the firm’s operations manager since 2019. They are currently seeking a senior associate to join their team.

Public Statements and Board Positions

Costolo recently made headlines for his strong criticism of Coinbase CEO Brian Armstrong’s stance against employee activism. He expressed his disapproval on Twitter, stating that leaders prioritizing profit over societal concerns would face consequences.

Bain currently serves on the boards of directors for both Opendoor, a real estate technology company, and Virgin Galactic, a space tourism company.

SPAC Involvement and Early Investments

01 Advisors co-sponsored the SPAC that facilitated Opendoor’s public offering, alongside investor Chamath Palihapitiya. Bain was invited to join the Virgin Galactic board as the merger with Palihapitiya’s blank-check company progressed.

Prior to forming 01 Advisors, Costolo and Bain made early investments in companies such as TripActions, a corporate travel site, and Tonal, a connected fitness startup.